Simulations Plus Reports Third Quarter FY2014 Financial Results

Simulations Plus, Inc. (NASDAQ: SLP), a leading provider of simulation
and modeling software for pharmaceutical discovery and development,
today reported financial results for its third quarter of fiscal year
2014 ended May 31, 2014 (3QFY14) and first nine months of fiscal year
2014 (9moFY14) compared to the third quarter (3QFY13) and first nine
months of fiscal year 2013 (9moFY13).

3QFY14 highlights compared with 3QFY13:

Net sales increased 20.9% to $3.741 million, an increase of $646,000
from $3.095 million

A large renewal order and one study contract slipped from Q2 into
Q3 ($300,000)

Excluding this shift, the Company set a new record for revenues
(11.2% increase)

Gross profit was up 32.9% to $3.513 million, an increase of $870,000
from $2.643 million

SG&A was $1.204 million, an increase of 33.3% or $301,000 from $0.904
million

Increased commissions on higher Asian sales, as well as increased
marketing labor and travel, consulting and professional fees, and
increases in salaries and wages, drove the increased SG&A

R&D expenditures were $552,000, an increase of $94,000 or 20.5% over
$458,000

In 3QFY14, $317,000 was capitalized and $235,000 was expensed

In 3QFY13, $252,000 was capitalized and $206,000 was expensed

Increases were due to expanded staff, and increases in salaries
and stock-based compensation for existing employees

Income before taxes increased 35.2% to $2.089 million, an increase of
$544,000 from $1.546 million

Net income increased 31.6% to $1.307 million , an increase of $314,000
from $993,000

Diluted earnings per share increased 30.7% to $0.079 from $0.061

9moFY14 highlights compared with 9moFY13:

Net sales were $9.463 million, an increase of $960,000 or 11.3% from
$8.503 million

Gross profit was $8.295 million, an increase of $1.129 million or
15.8% from $7.165 million

SG&A was $3.379 million, an increase of $689,000 or 25.6% from $2.690
million

Increased commissions on higher Asian sales, as well as increased
marketing labor and travel, consulting and professional fees, and
increases in salaries and wages, drove the increased SG&A

R&D expenditures were $1.803 million , an increase of $335,000, or
22.8% over $1.468 million

In 3QFY14, $1,052,000 was capitalized and $751,000 was expensed

In 3QFY13, $834,000 was capitalized and $634,000 was expensed

Increases were due to expanded staff, and increases in salaries
and stock-based compensation for existing employees

Income before taxes increased 5.3% to $4.225 million, an increase of
$212,000 from $4.014 million

Net income increased 6.1% to $2.803 million , an increase of $161,000
from $2.642 million

Diluted earnings per share was $0.171, an increase of 5.7% from $0.162

Mr. John Kneisel, chief financial officer of Simulations Plus, said:
“Simulations Plus delivered record revenue growth of 20.9%, of which
8.7% was attributable to customer budget realignments. In fact, the
quarter would have been a record even excluding the $300,000 in orders
which shifted from the second quarter into this quarter. As expected
with this growth, we experienced an increase in commission expense. Our
marketing expenses have increased as we continue our aggressive sales
strategy of attending more trade shows and conferences, both
domestically and internationally. During this last quarter, we
negotiated an agreement with TSRL, which led to increased professional
fees. We anticipate this agreement will have a significant positive
impact on future earnings, as we will no longer be paying royalties on
GastroPlus™, but will have a fixed amortization expense of $150,000 per
quarter. R&D expenses increased due to increased scientific staff. After
distributing just over $800,000 in dividends during 3QFY14, and
disbursing $2.5 million to TSRL, cash on May 31 was a healthy $7.8
million.”

Walt Woltosz, chairman and chief executive officer of Simulations Plus,
added: “Simulations Plus continues to grow both software license sales
and our consulting services business. Renewals continue to be strong,
coming in at 91% for the quarter, and 20 new customers joined the
Simulations Plus family of users. Also, as we announced yesterday, the Environmental
Protection Agency acquired several new software licenses during this
fourth quarter. Our strategy for expansion into the Asian market is
proving effective, as 18% of revenue came from that territory. We
continue to enhance our software products to maintain our best-in-class
standing across the products line. We added to our talent in this
quarter, hiring new scientists and engineers to grow organically and we
continue to seek accretive acquisition possibilities. Our dividend
provides a nice return to our shareholders, and although the Board of
Directors reserves the right to modify or discontinue the dividend at
any time to meet the needs of the business, we do not anticipate any
changes at this time.”

CIO, CTO & Developer Resources

Investor Conference Call

The Company will hold an investor conference call on Tuesday, July 8, at
1:15 PM PT/4:15 PM ET. The call will be webcast live and may be joined
by registering at the following website: https://www2.gotomeeting.com/register/915571978.
Upon registering, you will receive a confirmation e-mail with a unique
link and instructions for joining the call. Please dial in five to ten
minutes prior to the scheduled start time. For listen-only mode, you may
dial (646) 307-1724, and enter access code649-164-171.

About Simulations Plus, Inc.

Simulations Plus, Inc., is a premier developer of groundbreaking drug
discovery and development simulation and modeling software, which is
licensed to and used in the conduct of drug research by major
pharmaceutical, biotechnology, agrochemical, and food industry companies
worldwide. Simulations Plus, Inc., is headquartered in Southern
California and trades on the NASDAQ Capital Market under the symbol
“SLP.” For more information, visit our Web site at www.simulations-plus.com.

Safe Harbor Statement Under the Private Securities Litigation Reform
Act of 1995 – With the exception of historical information, the
matters discussed in this press release are forward-looking statements
that involve a number of risks and uncertainties. Words like “believe,”
“expect” and “anticipate” mean that these are our best estimates as of
this writing, but that there can be no assurances that expected or
anticipated results or events will actually take place, so our actual
future results could differ significantly from those statements. Factors
that could cause or contribute to such differences include, but are not
limited to: our ability to maintain our competitive advantages,
acceptance of new software and improved versions of our existing
software by our customers, the general economics of the pharmaceutical
industry, our ability to finance growth, our ability to continue to
attract and retain highly qualified technical staff, our ability to
identify and close acquisitions on terms favorable to the Company, and a
sustainable market. Further information on our risk factors is contained
in our quarterly and annual reports as filed with the Securities and
Exchange Commission.

SIMULATIONS PLUS, INC.

CONDENSED STATEMENTS OF OPERATIONS

For the three and nine months ended May 31,

(Unaudited)

Three months ended

Nine months ended

2014

2013

2014

2013

Net sales

$

3,740,567

$

3,094,779

$

9,463,059

$

8,502,994

Cost of sales

227,600

451,935

1,168,219

1,337,583

Gross profit

3,512,967

2,642,844

8,294,840

7,165,411

Operating expenses

Selling, general, and administrative

1,204,312

903,589

3,378,950

2,689,632

Research and development

234,685

206,424

750,808

634,281

Total operating expenses

1,438,997

1,110,013

4,129,758

3,323,913

Income from operations

2,073,970

1,532,831

4,165,082

3,841,498

Other income (expense)

Interest income

8,017

9,203

25,000

40,005

Interest expense

-

-

-

-

Miscellaneous income

-

4,694

-

35,488

Gain on currency exchange

7,340

(980

)

35,477

96,662

Total other income (expense)

15,357

12,917

60,477

172,155

Income from continuing operations before

provision for income taxes

2,089,327

1,545,748

4,225,559

4,013,653

Provision for income taxes

(781,778

)

(552,518

)

(1,422,991

)

(1,371,862

)

Net Income

$

1,307,549

$

993,230

$

2,802,568

$

2,641,791

Earnings per share

Basic

$

0.08

$

0.06

$

0.17

$

0.17

Diluted

$

0.08

$

0.06

$

0.17

$

0.16

Weighted-average common shares outstanding

Basic

16,193,976

16,024,467

16,117,198

15,984,819

Diluted

16,455,078

16,335,608

16,361,695

16,307,618

SIMULATIONS PLUS, INC.

CONDENSED BALANCE SHEETS

at May 31, 2014 (Unaudited) and August 31, 2013 (Audited)

(Unaudited)

(Audited)

May 31,

August 31,

2014

2013

ASSETS

Current assets

Cash and cash equivalents

$

7,757,972

$

10,179,298

Income tax refund receivable/Prepaid

946,518

301,573

Accounts receivable, net of allowance for doubtful accounts of $0

3,219,743

1,910,615

Contracts receivable

124,270

203,913

Prepaid expenses and other current assets

119,180

192,173

Deferred income taxes

217,655

184,258

Total current assets

12,385,338

12,971,830

Long-term assets

Capitalized computer software development costs,

net of accumulated amortization of $6,385,815 and $5,443,703

3,358,632

2,891,169

Property and equipment, net

103,596

117,987

Intellectual property, net of accumulated amortization of $41,875
and $11,250

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